Today's Quote: “Discipline is not something I impose on you so I can control you. Rather, it is something you must develop within yourself so you can become the best person you can be, not the one who could have been." Timothy F. Hough.

We often refer to that period of time from about noon until 1:30 P.M. EDT (lunch time) as “the doldrums”. This is the period of time that the volatility becomes very low. So much so, that trading becomes difficult on many days. There is very little movement in stocks, and most ‘breakouts’ do not follow through, leaving many traders baffled. There are two answers to deal with this problem. One is simple. Don’t trade the doldrums. Two, use a strategy that works in the doldrums.

You may have also noticed that there is a time of the year that can be more difficult. It is usually August, or the time just before or after that. Volatility can be low, or there can also be many failed moves in the markets. So what does one do about this? The answer is the same as how to handle the intraday noon doldrums. First, consider taking most of August off. If you trade full time, it is a great time to take a vacation. If you trade part time, focus on your other activities. If you trade longer term only, consider just managing positions or reducing activity.

There is a dangerous cycle that can occur. The lack of direction or sloppy patterns can cause stop outs. Feeling frustrated, traders will often try to ‘get back’ what the market took from them. This usually leads to more stop outs, and a stronger desire to trade to get back even. It is not unusual for some to increase activity in a doldrums type time, rather than reduce activity. Sound familiar anyone?

If you must trade, the first defense is to monitor the number of trades you are doing. If you must trade, trade less. If you monitor your activity, and find you are trading more and you are not doing well, stop.

Second, if you find yourself changing your bias intraday more than usual, that is a sign to stop as well. There will be many moves that in hindsight are meaningless. If you bite on all of them, your chances of success are not good.

Third, put things in perspective and plan your time. If you can not take vacation, consider using this time to get more education. Read books or watch educational DVDs half the day instead of watching the market (we have some suggestions if you don’t have any). Finish (or begin?) that trading plan. Get other projects out of the way that are impeding your trading.